Field of the Invention
The present invention relates generally to systems for detecting errors. More specifically, the present invention relates to a system and method for detecting billing errors using predictive modeling.
Related Art
In the healthcare field, billing and coding are complex processes that involve multiple “handoffs” between various medical departments/entities, etc., as well as human intervention. Typically, when a patient visits a hospital, the doctor diagnoses the patient's symptoms and orders services to cure his/her illness or to alleviate symptoms. After the patient is discharged from the hospital, professional coders manually code the services and procedures provided to patients by reading physician orders, nurse notes, laboratory records, and many other medical records to prepare claims. This inevitably leads to billing errors or missed charges due to various reasons (e.g., misreading handwritten notes, delayed laboratory records, different billing rules for hospitals or insurance plans, inexperienced coders, etc.). As a result, there are direct losses associated with missing charges since hospitals (or other types of businesses) will not get paid by insurance companies or other payers. Further, claims with billing errors are also denied by payers. It has been estimated that about 1% of hospital revenue is lost due to the missing charges.
In order to prevent revenue leakage, most hospitals rely on manual review, and/or rule-based software solutions for checking bills before they are issued. Manual and rule-based solutions have difficulty handling different practice patterns across large systems (e.g., a large hospital system), which results in many exceptions and false-positives that may lead to denied claims due to billing errors, wasted time and resources, increased costs, etc. For pre-billing checks that are manually conducted, internal and/or third party reviewers review charges for a sample (10-15%) of pre-bill visits. Due to the expense of this approach, it is often reserved for only the most expensive procedures (e.g., surgeries, transplants, and cardiac procedures) and the review quality depends on the ability of the auditors (e.g., experience, training, etc.), who need to be constantly trained and educated on changes in medical care or billing.
Rule-based software solutions are mainly used to check for billing errors, instead of missing charges, and are often implemented as rules requiring the co-occurrence of specific procedure codes to check the consistency of claims. These solutions are only as effective as the rules created by the client, and usually the rules are too simple to capture the complicated patterns that exist in hospital billing, while the billing system as a whole becomes too complicated to maintain. For example, rule-based systems typically, and impractically, recommend hundreds of possible missing codes.